Psych hospital outpatient services grow, but don't add revenue-study," proclaimed a headline in the Aug. 1 (p. 20) issue of MODERN HEALTHCARE.
The article cited a survey of National Association of Psychiatric Health Systems members, which found that partial hospitalization and outpatient admissions grew to 20% of all admissions at psychiatric health systems in 1993, twice the percentage of the previous year. However, revenues from those services declined to 7.7% of total revenues from 8.2% during the same period.
Are partial hospitalization and other outpatient modalities financial underachievers for mental health organizations, as the survey seemed to suggest? Not necessarily.
Numbers not all-inclusive.One consideration is that all the organizations surveyed were NAPHS members-hospital-based providers that derive some 89% of their revenues from "bed-based" services. Not surveyed were other types of providers that offer cost-effective, clinically attractive alternatives to inpatient care. They include community-based, freestanding partial hospitalization providers, comprehensive community mental health centers, and the psychiatric and chemical-dependency units of acute-care hospitals. Such
providers successfully compete with the inpatient sector for managed-care and indemnity psychiatric business.
Also, a more critical look at the management paradigm of psychiatric hospitals may explain why the outpatient revenues of NAPHS member facilities declined while their outpatient admissions grew.
In the past, psychiatric hospitals have enjoyed some of the best profit margins in the healthcare industry. Now they struggle to maintain census and lengths of stay, trying to forestall the decline of inpatient psychiatric care. The NAPHS study found that inpatient days dropped a dramatic 31% from 1992 to 1993.
Programs with potential.Partial hospitalization programs should have a promising future. They support the idea that is now recognized by managed-care payers that mental health treatment works best when it takes place within the family, community and social network where patients must continue to lead their lives.
Some predict that partial hospitalization revenues could double in the coming year. Therefore, hospital-based providers are attempting to include such programs in a shift toward creating continuums of care. But are hospital-based providers making the shift effectively? And are the programs being managed correctly?
Becoming a continuum-of-care provider requires more than just changing your name from "hospital" to "healthcare system" or adding partial hospitalization as a way to attract business. It requires a transformation of operations at all levels of an organization. The inpatient mind-set must be changed if providers expect to be clinically and financially successful in outpatient care.
Hospital-based providers that add partial hospitalization programs and don't see a revenue increase may be managing those services like inpatient services. Partial hospitalization should not be used as a "step down" from inpatient services or as a desperate attempt to keep patients within a system when inpatient admissions are denied.
Such a strategy will quickly ruin credibility with referral sources and payers. Managed care, Medicare and the Civilian Health and Medical Program of the Uniformed Services will be far more cooperative and supportive of a system when less restrictive admissions occur regularly and when such admissions trends can be justified through outcomes data.
A "step up."An effective strategy is to use outpatient services as the entry point into a system. Patients should "step up" to inpatient services for crisis intervention when needed. This requires establishing criteria to determine which level of care is the most appropriate.
Hospital-based providers experiencing anemic revenues for partial hospitalization services should examine whether claim denials are partially responsible for the low revenues. Hospitals should determine if their staffs understand the documentation requirements needed to justify partial hospitalization stays and receive full reimbursement for services provided. Providers must develop treatment plans that meet the needs of patients and payers.
In acute-care hospitals with psychiatric services, the staff must understand the complexities of DRGs and the provisions of the Tax Equity and Fiscal Responsibility Act, and how careful discharge planning using partial hospitalization can save a hospital significant costs and make payers take notice. Psychiatric hospitals need to consider restructuring into full-service providers willing to offer more flexible care.
Partial hospitalization and other outpatient strategies have the potential to generate significant revenues for hospital-based providers. But hospitals must realize that partial programs are inherently different than inpatient programs and change their management systems to be successful and profitable.